(The following story by Alan Ohnsman and Chris Cooper appeared on the Bloomberg Businessweek website on June 18, 2010.)

California — California, the top recipient of funds from President Barack Obama’s high-speed rail program, expects to issue a tender for a bullet-train line linking Los Angeles and San Francisco by late 2011.

California’s push for high-speed rail, backed by Governor Arnold Schwarzenegger, comes as the most populous U.S. state targets cuts in congestion and greenhouse gas emissions from cars and airplanes. The Obama administration in January awarded $8 billion for high-speed rail projects, causing companies such as Alstom SA, Siemens AG, East Japan Railway Co., China South Locomotive & Rolling Stock Corp. to boost sales efforts.

“A high-speed line between Los Angeles and San Francisco makes sense given their large populations and the distance between them,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc., which manages about $8.3 billion. “There might be some companies trying to sell their technologies even if they don’t make a profit, so they can make a name for themselves.”

When fully completed the state anticipates an 800-mile high-speed rail network running from San Francisco to San Diego, near the U.S.-Mexico border. The total cost for the system will be more than $40 billion.

Construction From 2012California won a $2.3 billion federal grant to help build the high-speed link, which is due to enter service in 2020. That’s in addition to a $10 billion bond sale the state approved in 2008 to fund the rail line. The state has until September 2011 to complete an environmental review, Kopp said.

“Allow four months for the conclusion of proposals and bids, and I estimate conservatively that construction will begin by the first part of 2012,” said Kopp, who was at a U.S. High Speed Rail Association conference in Los Angeles.

Schwarzenegger has proposed running high-speed trains on existing conventional tracks between Los Angeles and San Diego as early as November to spur interest in high-speed rail. Kopp said he doubted whether that timeframe would be met.

“Will that happen in the time variant in the governor’s recent proposal?” Kopp said. “ I don’t think so,” he said without elaboration.

Amtrak TrainsTrains operated by Amtrak, the U.S. long-distance passenger railroad, currently don’t run directly between Los Angeles and San Francisco. Travel between Los Angeles and Oakland, which neighbors San Francisco, on Amtrak’s Coast Starlight line takes about 12 hours or twice as long as traveling by car.

Air travel between Los Angeles and the San Francisco Bay Area takes about an hour.

“The airlines will certainly lose some of their business,” said Fukoku Capital’s Sakurai. “If you add up the time spent traveling to airports, security checks and delays it makes sense to take the train.”

U.S. Transport Secretary Ray LaHood last month visited Japan, where he tried out a JR East bullet train and rode Central Japan Railway Co.’s magnetic-levitation railway. He also encouraged Japanese trainmakers to compete for U.S. contracts and to set up plants in the country. Japan’s Transport Minister Seiji Maehara is planning a second visit to the U.S. this year to help stoke interest in bullet trains.

320 kmh TrainJR East will introduce a bullet train next year that can reach speeds of 320 kmh (199 miles per hour). The fastest train in the U.S., Amtrak’s Acela Express, which is built by Alstom and Bombardier Inc., is capable of running at up to 150 mph.

Japanese trainmakers have previously won overseas deals. Kawasaki Heavy Industries Ltd. made the trains for Taiwan’s $15 billion high-speed line that started operating three years ago between suburban Taipei and Kaohsiung in the south. Hitachi Ltd. built high-speed trains running between London and the south- east of the U.K.

China’s Ministry of Railways has teamed up with General Electric Co. in a bid to win U.S. contracts. The two in November agreed a partnership to manufacture equipment for high-speed rail projects.

Japan, which started the world’s first bullet-train services in 1964, carried 308 million people by high-speed train in the year ended March 2009, more than triple the number of passengers on domestic airline routes. Amtrak’s Acela Express carried 3.4 million passengers in fiscal 2008.